1

 
Agreement dated August 13, 2010 by and among the Company and the purchasers under that certainSecurities Purchase Agreement dated August 13, 2010 pursuant to which the Company sold units ofconvertible debentures and common stock warrants.     “**Effectiveness Date**” means, (i) with respect to the Initial Registration Statement, assoon as practicable, but no later than one hundred twenty (120) calendar days after the FinalClosing, and (ii) with respect to any additional Registration Statements which may be required tobe filed hereunder pursuant to Section 3(d) or otherwise, not later than ninety (90)calendar days following the date onwhich the additional Registration Statement is required to be filed hereunder if it is notsubject to a SEC review or if the additional Registration Statement is subject to a SEC review onehundred twenty (120) calendar days after the date such Registration Statement is required to befiled hereunder.     “**Exchange Act**” shall mean the Securities Exchange Act of 1934, as amended, and all ofthe rules and regulations promulgated thereunder.     “**Family Member**” means (a) with respect to any individual, such individual’s spouse,any descendants (whether natural or adopted), any trust all of the beneficial interests of whichare owned by any of such individuals or by any of such individuals together with any organizationdescribed in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of anysuch individual, and any corporation, association, partnership or limited liability company all ofthe equity interests of which are owned by those above described individuals, trusts ororganizations and (b) with respect to any trust, the owners of the beneficial interests of suchtrust.     “**Filing Date**” shall mean, with respect to the Initial Registration Statement, withinsixty(60) calendar days after the Final Closing, provided, however, that, if the FilingDate falls on a Saturday, Sunday or other day, that the SEC is closed for business, the Filing Dateshall be extended to the next Business Day.     “**Final Closing**” shall mean the meaning ascribed to such term in the ConfidentialPrivate Placement Memorandum.     “**First Closing**” shall have the meaning ascribed to such term in the SubscriptionAgreement.     “**Holder**” means each Investor or any of such Investor’s respective successors andPermitted Assignees who acquire rights in accordance with this Agreement with respect to anyRegistrable Securities directly or indirectly from a Purchaser or from any Permitted Assignee.     “**Initial Registration Statement**” shall mean the initial Registration Statement filedpursuant to this Agreement.     “**Investor Permitted Transferees**” as defined in the Preamble.     “**Investors**” shall mean, collectively, the Investors and the Investor PermittedTransferees; provided, however, that the term “Investors” shall not include any ofthe Investors or any of the Investor Permitted Transferees that do not own or hold any RegistrableSecurities.
2

 
     “**Permitted Assignee**” means (a) with respect to a partnership, its partners or formerpartners in accordance with their partnership interests, (b) with respect to a corporation, itsstockholders in accordance with their interest in the corporation, (c) with respect to a limitedliability company, its members or former members in accordance with their interest in the limitedliability company, (d) with respect to an individual party, any Family Member of such party, (e) anentity that is controlled by, controls, or is under common control with a transferor, or (f) aparty to this Agreement.     “**Person**” means an individual or corporation, partnership, trust, incorporated orunincorporated association, joint venture, limited liability company, joint stock company,government (or agency or subdivision thereof) or other entity of any kind.     “**Registrable Securities**” shall mean the Registrable Unit Shares and the RegistrableWarrant Shares.     “**Registrable Unit Shares**” shall mean the shares of Common Stock issuable uponconversion of the Unit Shares.     “**Registrable Warrant Shares**” shall mean the shares of Common Stock issuable uponexercise of the Warrants.     “**Registration Statement**” means any one or more registration statements filed (and/orrequired to be filed pursuant hereto) with the SEC by the Company on Form S-3, or in the event theCompany is not eligible to use Form S-3, on Form S-1, for the purpose of registering theRegistrable Securities, including (in each case) the prospectus, amendments and supplements to suchregistration statement or prospectus, including pre- and post-effective amendments, all exhibitsthereto, and all material incorporated by reference or deemed to be incorporated by reference insuch registration statement. The term “Registration Statement” shall include, but not be limitedto, the Initial Registration Statement.     “**Rule 144**” shall mean Rule 144 promulgated by the SEC pursuant to the Securities Actand any successor or substitute rule, law or provision.     “**Rule 172**” means Rule 172 promulgated by the SEC pursuant to the Securities Act, assuch Rule may be amended from time to time, or any similar rule or regulation hereafter adopted bythe SEC having substantially the same purpose and effect as such Rule.     “**Rule 415**” means Rule 415 promulgated by the SEC pursuant to the Securities Act, assuch Rule may be amended from time to time, or any similar rule or regulation hereafter adopted bythe SEC having substantially the same purpose and effect as such Rule.     “**Rule 424**” means Rule 424 promulgated by the SEC pursuant to the Securities Act, assuch Rule may be amended from time to time, or any similar rule or regulation hereafter adopted bythe SEC having substantially the same purpose and effect as such Rule.     “**SEC**” shall mean the United States Securities and Exchange Commission.
3

 
     “**SEC Guidance**” means (i) any publicly-available written guidance, or rule of generalapplicability of the SEC staff, or (ii) oral or written comments, requirements or requests of theSEC staff to the Company in connection with the review of a Registration Statement.     “**Securities Act**” shall mean the Securities Act of 1933, as amended, and all of therules and regulations promulgated thereunder.     “**Trading Day**” means (a) if the Common Stock is listed or quoted on the NASDAQ Market,then any day during which securities are generally eligible for trading on the NASDAQ Market, or(b) if the Common Stock is not then listed or quoted and traded on the NASDAQ Market, then anyBusiness Day.     “**Unit Shares**” as defined in the preamble.     “**Warrant Shares**” as defined in the preamble.     2. EFFECTIVENESS; This Agreement shall become effective and legally binding only ifthe First Closing occurs.     3. MANDATORY REGISTRATION.          (a) The Company shall be required to file an Initial Registration Statement on or prior to theFiling Date registering the Registrable Securities for resale by the Holders as sellingstockholders thereunder. On or prior to the Filing Date, the Company shall prepare and file withthe SEC an Initial Registration Statement for the purpose of registering under the Securities Actthe resale of all, or such portion as permitted by SEC Guidance (and the Company shall make acommercially reasonable effort toadvocate with the SEC for the registration of all or the maximum number of the RegistrableSecurities as permitted by SEC Guidance) of the Registrable Securities by, and for the account of,the Holders as selling stockholders thereunder, that are not then registered on an effectiveRegistration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Noother securities shall be included in the Initial Registration Statement that is filed except forthe Registrable Securities and the Debenture Registrable Securities. The Company shall cause aRegistration Statement to be declared effective by the SEC under the Securities Act as promptly aspracticable after the filing thereof, but in any event on or prior to the applicable EffectivenessDate.          (b) The Company shall be required to keep a Registration Statement effective until such datethat is the earlier of (the “**Effectiveness Period**”) (i) the date as of which all of theHolders as selling stockholders thereunder may sell all of the Registrable Securities registeredfor resale thereon without restriction pursuant to Rule 144 or (ii) the date when all of theRegistrable Securities registered thereunder shall have been sold (such date is referred to hereinas the “**Mandatory Registration Termination Date**”). Thereafter, the Company shall beentitled to withdraw such Registration Statement and the Holders shall have no further right tooffer or sell any of the Registrable Securities registered for resale thereon pursuant to therespective Registration Statement (or any prospectus relating thereto).
4

 
          (c) Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth alimitation on the number of Registrable Securities and Debenture Unit Registrable Securities to beregistered in the Initial Registration Statement (and the Company has made a commerciallyreasonable effort to advocate with the SEC for the registration of all or a greater number of suchregistrable securities), the number of Registrable Securities and Debenture Unit RegistrableSecurities to be registered on such Registration Statement will be reduced on a pro rata basisamong the Investors and the Debenture Unit Holders based on the total number of unregisteredRegistrable Securities and Debenture Unit Registrable Securities held by the Holders and theDebenture Unit Holders, respectively, on a fully diluted basis. With respect to such *pro rata*reduction on Registrable Securities, the number of Registrable Securities to be registered on suchRegistration Statement will first be reduced by the Registrable Securities represented by theRegistrable Warrant Shares (applied, in the case that some Registrable Warrant Shares may beregistered, to the Holders on a pro rata basis based on the total number of unregisteredRegistrable Warrant Shares held by such Holders), and second by Registrable Securities representedby Registrable Unit Shares (applied, in the case that some Registrable Unit Shares may beregistered, to the Holders on a pro rata basis based on the total number of unregistered UnitShares held by such Holders). The Company shall file a new registration statement as soonas reasonably practicable covering the resale by the Holders and the Debenture Unit Holders of notless than the number of such Registrable Securities and the Debenture Unit Registrable Securities,respectively, that are not registered in the Initial Registration Statement. The Company shall notbe liable for liquidated damages under Section 5(a) as to any Registrable Securities whichare not permitted by the SEC to be included in a Registration Statement due solely to SEC Guidancefrom time to time. In such case, any liquidated damages payable under Section 5(a) shallbe calculated to apply only the percentage of Registrable Securities which are permitted inaccordance with SEC Guidance to be included in such Registration Statement.          (d) If during the Effectiveness Period, subject to Section 3(a) and Section3(c), the Company becomes aware that the number of Registrable Securities at any time exceedsthe number of Registrable Securities then registered for resale in a Registration Statement, thenthe Company shall file as soon as reasonably practicable an additional Registration Statementcovering the resale by the Holders of not less than the number of such Registrable Securities thatare not then registered.          (e) Notwithstanding any other provision of this Agreement, if during the Effectiveness Periodany of the Registrable Securities become eligible for resale without restriction pursuant to Rule144 (the “**Rule 144 Eligible Securities**”) then the number of Registrable Securitiesoutstanding at any one time shall be reduced by the number of Rule 144 Eligible Securities and theCompany may at its option file an amendment to any Registration Statement to reduce the number ofRegistrable Securities accordingly. The Company acknowledges that the Company’s obligation to fileits periodic disclosure documents for the twelve (12) month period preceding the date of sale is a“restriction” as that term is used in the firstsentence of this Section 3(e).
5

 
     4. PIGGYBACK REGISTRATION.          (a) If, at any time, commencing on the date of the First Closing, the Company proposes toprepare and file with the SEC a registration statement under the Securities Act, the Company willgive written notice to each Holder of its intention to do so by certified mail and shall includeall of the Registrable Securities in such registration statement; provided,however, that in connection with any offering involving an underwriting of shares of CommonStock, the Company shall not be required to include the Registrable Securities of any Holder insuch registration statement unless they accept the terms of the underwriting as agreed upon betweenthe Company and its underwriters, and then only in such quantity as the underwriters determine intheir sole discretion will not jeopardize the success of the offering by the Company. In the eventthat the underwriters determine that less than all of the Registrable Securities required to beregistered can be included in such offering, then the Registrable Securities that are includedshall be apportioned, among the Investors and the Debenture Unit Holders on a pro rata basis basedon the total number of unregistered Unit Shares and Debenture Unit Registrable Securities held bysuch Investors and the Debenture Unit Holders and requested to be included in the RegistrationStatement on a fully diluted basis. The Company shall use its best efforts to effect theregistration under the Securities Act of the Registrable Securities at the Company’s sole cost andexpense and at no cost or expense to the Holders (other than any commission, discounts or counselfees payable by the Holders, as further provided in Section 7 hereof).          (b) Notwithstanding the preceding provisions of this Section 4, the Company shall havethe right any time after it shall have given written notice pursuant to this Section 4(irrespective of whether any written request for inclusion of such securities shall havealready been made) to elect not to file any proposed registration statement, or to withdraw thesame after the filing but prior to the effective date thereof.          (c) The Company shall use its commercially reasonable efforts to cause the registrationstatement filed pursuant to this Section 4 to become effective as promptly as possibleunder the circumstances at the time prevailing and, if any stop order shall be issued by the SEC inconnection therewith, to use its reasonable efforts to obtain the removal of such order.          (d) To the extent any Registrable Securities of the Holders are included in such registrationstatement, the Company shall notify each Holder by facsimile or e-mail as promptly as practicable,and in any event, within two (2) Trading Days, after such registration statement is declaredeffective and shall simultaneously provide the Holders with a copy of any related prospectus to beused in connection with the sale or other disposition of the Registrable Securities coveredthereby.     5. PENALTIES/SUSPENSION OF A REGISTRATION STATEMENT.          (a) If: (i) the Initial Registration Statement and any other Registration Statement is notfiled on or prior to the Filing Date, or (ii) the Company fails to file with the SEC a request foracceleration in accordance with Rule 461 promulgated under the Securities Act, within five (5)Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier)by the SEC that the Initial Registration Statement or any other Registration Statement will not be“reviewed” or not be subject to further review, or (iii) prior to the
6

 
Effectiveness Date of the Initial Registration Statement or any other Registration Statement,the Company fails to file a pre-effective amendment and otherwise respond in writing to commentsmade by the SEC in respect of such Initial Registration Statement or any other RegistrationStatement within ten (10) Business Days after the receipt of comments by or notice from the SECthat such amendment is required in order for such Initial Registration Statement or any otherRegistration Statement to be declared effective, or (iv) subject to the tolling provisionscontained herein, as to, in the aggregate among all Investors on a pro rata basis based on theamount of Registrable Securities held by each of them, respectively, the lesser of (A) all of theRegistrable Securities and (B) the maximum number of Registrable Securities permitted by SECGuidance (collectively, the “**Initial Shares**”), a Registration Statement registering forresale all of the Initial Shares is not declared effective by the SEC by the Effectiveness Date, or(v) after the Effectiveness Date of the Initial Registration Statement or any other RegistrationStatement, subject to the tolling provisions contained herein, such Initial RegistrationStatement or other Registration Statement ceases for any reason to remain continuously effective asto all Registrable Securities included in such Initial Registration Statement or other RegistrationStatement, as applicable, or the Investors are otherwise not permitted to utilize the Prospectustherein to resell such Registrable Securities, for more than ten (10) consecutive Business Days ormore than an aggregate of twenty (20) Business Days during any twelve (12) month period (which neednot be consecutive Business Days), provided, however, that no payments providedbelow shall be required in connection with a Suspension Period (as hereinafter defined) (any suchfailure or breach being referred to as an “**Event**,” and for purposes of clause (i), (iv) or(v) the date on which such Event occurs, or for purposes of clause (ii) the date on which suchfive (5) Trading Day period is exceeded, or for purposes of clause (iii) the date which such ten(10) Business Day period is exceeded, or for purposes of clause (v) the date on which such ten(10) or twenty (20) Business Day period, as applicable, is exceeded being referred to as“**Event Date**”), then, in addition to any other rights the Investors may have hereunder orunder applicable law, on each such Event Date and on each monthly anniversary of each such EventDate (if the applicable Event shall not have been cured by such date) until the applicable Event iscured, the Company shall, subject to Section 3(c), pay to each Investor on a monthly basiswithin three (3) Business Days of the end of the month an amount in cash, as liquidated damages andnot as a penalty, equal to two percent (2.0%) of the aggregate purchase price paid by such Investorpursuant to the Subscription Agreement for any Registrable Securities then held by such Investor(as applicable under clause (iv)) that are not then eligible for resale pursuant to the InitialRegistration Statement or other Registration Statement. The parties agree that the maximumaggregate liquidated damages payable to an Investor under this Agreement shall be twelve percent(12%) of the aggregate amount paid by such Investor for its respective Registrable Securitiespursuant to the Subscription Agreement. If the Company fails to pay any liquidated damages pursuantto this Section 5(a) in full within ten (10) calendar days after the date payable, theCompany will be required to pay such liquidation damages in cash only and shall pay interestthereon at a rate of eighteen (18%) percent per annum (or such lesser maximum amount that isrequired to be paid by applicable law) to the Investor, accruing daily from the date such partialliquidated damages are due until such amounts, plus all such interest thereon, are paid in full;provided, however, that if the tenth calendar day after the date payable is not aBusiness Day then the payment shall be due on the next Business Day. The liquidated damagespursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month priorto the cure of an Event.
7

 
          (b) The Company shall notify each Holder by facsimile or e-mail as promptly as practicable,and in any event, within one (1) Trading Day, after a Registration Statement is declared effectiveand shall simultaneously provide each Holder with an electronic copy of any related prospectus tobe used in connection with the sale or other disposition of the Registrable Securities coveredthereby. Failure to notify the Holders in accordance with thisSection 5(b) shall be deemedan Event under Section 5(a).          (c) No Investor shall be entitled to a payment pursuant to this Section 5 ifeffectiveness of a Registration Statement has been delayed or a prospectus has been unavailable asa result of (i) a failure by such Investor to promptly provide on request by the Company theinformation required under the Subscription Agreement or this Agreement or requested by the SEC asa condition to effectiveness of a Registration Statement; (ii) the provision of inaccurate orincomplete information by such Investor; or (iii) a statement or determination of the SEC that anyprovision of the rights of the Investor under this Agreement are contrary to the provisions of theSecurities Act.     6. OBLIGATIONS OF THE COMPANY. In the event the Company files a Registration Statementwith the SEC in connection with Section 3 or Section 4 hereof that covers theRegistrable Securities and uses its commercially reasonable efforts to cause a RegistrationStatement to become effective, the Company shall, as expeditiously as reasonably possible:          (a) Prepare and file with the SEC such amendments and supplements to a Registration Statementand the prospectus used in connection therewith as may be necessary to comply with the provisionsof the Securities Act with respect to the disposition of all Registrable Securities covered by aRegistrationStatement;          (b) Furnish to the selling Holders such number of copies of a prospectus, including apreliminary prospectus, in conformity with the requirements of the Securities Act, and such otherdocuments (including, without limitation, prospectus amendments and supplements as are prepared bythe Company in accordance with Section 6(a) above) as the selling Holders may reasonablyrequest in order to facilitate the disposition of such selling Holders’ Registrable Securities;          (c) Use commercially reasonable efforts to comply with all applicable rules and regulations ofthe SEC under the Securities Act and the Exchange Act, including, without limitation, Rule 172under the Securities Act, file any final prospectus, including any supplement or amendment thereof,with the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writingif, at any time during a period of effectiveness, the Company does not satisfy the conditionsspecified in Rule 172 and, as a result thereof, the Holders are required to deliver a prospectus inconnection with any disposition of Registrable Securities; notify the selling Holders of thehappening of any event as a result of which the prospectus included in or relating to aRegistration Statement contains an untrue statement of a material fact or omits any fact necessaryto make the statements therein not misleading; and, thereafter, subject to Section 12hereof, the Company will promptly prepare (and, when completed, give notice and provide a copythereof to each selling Holder) a supplement or amendment to such prospectus so that suchprospectus will not contain an untrue statement of a material fact or omit to state any factnecessary to make the statements therein not misleading; provided, however, thatupon such
8

 
notification by the Company (which shall be a Suspension pursuant to Section 12), theselling Holders will not offer or sell Registrable Securities until the Company has notified theselling Holders that it has prepared a supplement or amendment to such prospectus and filed it withthe SEC or, if the Company does not then meet the conditions for the use of Rule 172, deliveredcopies of such supplement or amendment to the selling Holders (it being understood and agreed bythe Company that the foregoing proviso shall in no way diminish or otherwise impair the Company’sobligation to promptly prepare a prospectus amendment or supplement as above provided in thisSection 6(c) and deliver copies of same as above providedin Section 6(b) hereof);and          (d) Use its best efforts to register and qualify the Registrable Securities covered by aRegistration Statement under such other securities or Blue Sky laws of such states as shall bereasonably appropriate in the opinion of the Company, provided, however, that theCompany shall not be required in connection therewith or as a condition thereto to qualify to dobusiness or to file a general consent to service of process in any such states or jurisdictions,and providedfurther that (notwithstanding anything in this Agreement to the contrary withrespect to the bearing of expenses) if any jurisdiction in which any of such Registrable Securitiesshall be qualified shall require that expenses incurred in connection with the qualificationtherein of any such Registrable Securities be borne by the selling Holders, then the sellingHolders shall, to the extent required by such jurisdiction, pay their pro rata share of suchqualification expenses.          (e) Subjectto the terms and conditions of this Agreement, including Section 3 andSection 4 hereof, the Company shall use its commercially reasonable efforts to (i) preventthe issuance of any stop order or other suspension of effectiveness of a Registration Statement, orthe suspension of the qualification of any of the Registrable Securities for sale in anyjurisdiction in the United States, and (ii) if such an order or suspension is issued, obtain thewithdrawal of such order or suspension at the earliest practicable moment and notify each holder ofRegistrable Securities of the issuance of such order and the resolution thereof or its receipt ofnotice of the initiation or threat of any proceeding such purpose.          (f) The Company shall (i) comply with all requirements of FINRA with regard to the issuance ofthe Registrable Securities and the listing thereof on the OTC Bulletin Board and such othersecurities exchange or automated quotation system, as applicable, and (ii) engage a transfer agentand registrar to maintain the Company’s stock ledger for all Registrable Securities covered by aRegistration Statement not later than the effective date of a Registration Statement.          (g) The Company will file a Registration Statement and all amendments and supplements theretoelectronically on EDGAR.     7. OBLIGATIONS OF THE HOLDERS.          (a) It shall be a condition precedent to the obligations of the Company to take any actionpursuant to this Agreement that the selling Holders shall furnish to the Company a completedSelling Stockholder Questionnaire in the form attached as Exhibit B hereto (the“**Selling Stockholder Questionnaire**”) and such other information regarding them and thesecurities held by them as the Company shall reasonably request and as shall be required in order
9

 
to effect any registration by the Company pursuant to this Agreement. The Company shall not berequired to include the Registrable Securities of any Holder who fails to furnish to the Company afully completed Selling Stockholder Questionnaire at least three (3) Trading Days prior to theFiling Deadline. Additionally, each Holder shall promptly notify the Company of any changes in theinformation furnished in the Selling Stockholder Questionnaire or otherwise to the Company.          (b) Each Holder agrees to cooperate with the Company as reasonably requested by the Company inconnection with the filing of any Registration Statement hereunder, unless such Holder has notifiedthe Company in writing that such Holder elects to exclude all of its Registrable Securities fromsuch Registration Statement.          (c) Each Holder agrees that, upon receipt of any notice from the Company of the happening ofany event of the kind described in Section 6(c), each Holder shall immediately discontinuedisposition of Registrable Securities pursuant to any Registration Statement covering suchRegistrable Securities until such Holders receipt of the copies of the supplemented or amendedprospectus contemplated by Section 6(c) or receipt of notice that no supplement oramendment is required.          (d) Each Holder covenants and agrees that it will comply with the prospectus deliveryrequirements of the Securities Act as applicable to it or an exemption therefrom in connection withsale of Registrable Securities pursuant to any Registration Statement.     8. EXPENSES OF REGISTRATION.          (a) Except as set forth in Section 6(d), all expenses incurred in connection with theregistration of the Registrable Securities pursuant to this Agreement (excluding underwriting,brokerage and other selling commissions and discounts), including without limitation allregistration and qualification and filing fees, printing, fees and disbursements of counsel for theCompany shall be borne by the Company; provided, however**,**the Holders shall berequired to pay the expenses of counsel and any other advisors for the Holders and any brokerage orother selling discounts or commissions and any other expenses incurred by the Holders for their ownaccount.          (b) Until such time as all of the Registrable Securities have been sold pursuant to aneffective Registration Statement, the Company shall take such reasonable action as the Holder mayrequest (including, without limitation, promptly obtaining any required legal opinions from Companycounsel necessary to effect the sale of the Registrable Securities under Rule 144 and paying therelated fees and expenses of such counsel), all to the extent required from time to time to enablesuch Holder to sell the Registrable Securities without registration under the Securities Actpursuant to the provisions of Rule 144 under the Securities Act (or any successor provision). TheCompany further covenants to take such action and to provide such legal opinions within five (5)Business Days after receipt from such Holder (or its representative) of documentation reasonablyrequired by the Company counsel to provide such opinion.     9. DELAY OF REGISTRATION. The Holders shall not take any action to restrain, enjoin orotherwise delay any registration as the result of any controversy which might arise with respect tothe interpretation or implementation of this Agreement.
10

 
     10. INDEMNIFICATION.          (a) To the extent permitted by law, the Company will indemnify and hold harmless each sellingHolder, and each officer and director of such selling Holder and each person, if any, who controlssuch selling Holder, within the meaning of the Securities Act, against any losses, claims, damagesor liabilities, joint or several, to which they may become subject under the Securities Act orotherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof)arise out of or are based upon (i) any untrue or alleged untrue statement of any material factcontained in a RegistrationStatement, in any preliminary prospectus or final prospectus relating thereto or in any amendmentsor supplements to a Registration Statement or any such preliminary prospectus or final prospectus,or arise out of or are based upon the omission or alleged omission to state therein a material factrequired to be stated therein, or necessary to make the statements therein not misleading; (ii) anyblue sky application or other document executed by the Company specifically for that purpose orbased upon written information furnished by the Company filed in any state or other jurisdiction inorder to qualify any or all of the Registrable Securities under the securities laws thereof (anysuch application, document or information herein called a “**Blue Sky Application**”); (iii)the omission or alleged omission to state in a Blue Sky Application a material fact required to bestated therein or necessary to make the statements therein not misleading; (iv) any violation bythe Company or its agents of any rule or regulation promulgated under the Securities Act applicableto the Company or its agents and relating to action or inaction required of the Company inconnection with such registration of the Registrable Securities; or (v) any failure to register orqualify the Registrable Securities included in any such Registration Statement in any state wherethe Company or its agents has affirmatively undertaken or agreed in writing that the Company willundertake such registration or qualification on a Holder’s behalf; and will reimburse such sellingHolder, or such officer, director or controlling person for any legal or other expenses reasonablyincurred by them in connection with investigating or defending any such loss, claim, damage,liability or action; provided, however, that the indemnity agreement contained inthis Section 10(a) shall not apply to amounts paid in settlement of any such loss, claim,damage, liability or action if such settlement is effected without the consent of the Company(which consent shall not be unreasonably withheld), nor shall the Company be liable in any suchcase for any such loss, damage, liability or action to the extent that it arises out of or is basedupon (i) an untrue statement or alleged untrue statement or omission made in connection with aRegistration Statement, any preliminary prospectus or final prospectus relating thereto or anyamendments or supplements to a Registration Statement or any such preliminary prospectus or finalprospectus, in reliance upon and in conformity with written information furnished expressly for usein connection with a Registration Statement or any such preliminary prospectus or final prospectusby the selling Holders or (ii) at any time when the Company has advised the Holder in writing thatthe Company does not meet the conditions for use of Rule 172 and as a result that the Holder isrequired to deliver a current prospectus in connection with any disposition of RegistrableSecurities, an untrue statement or alleged untrue statement or omission in a prospectus that is(whether preliminary or final) corrected in any subsequent amendment or supplement to suchprospectus that was delivered to the selling Holderbefore the pertinent sale or sales by theselling Holder.
11

 
          (b) To the extent permitted by law, each selling Holder will severally and not jointlyindemnify and hold harmless the Company, each of its directors, each of its officers who havesigned a Registration Statement, each person, if any, who controls the Company within the meaningof the Securities Act, against any losses, claims, damages or liabilities to which the Company orany such director, officer, controlling person, may become subject to, under the Securities Act orotherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereto)arise out of or are based upon any untrue or alleged untrue statement of any material factcontained in a Registration Statement or any preliminary prospectus or final prospectus, relatingthereto or in any amendments or supplements to a Registration Statement or any such preliminaryprospectus or final prospectus, or arise out of or are based upon the omission or alleged omissionto state therein a material fact required to be stated therein or necessary to make the statementstherein not misleading, in each case to the extent and only to the extent that such untruestatement or alleged untrue statement or omission or alleged omission(i) was made in a Registration Statement, in any preliminary prospectus or final prospectusrelating thereto or in any amendments or supplements to a Registration Statement or any suchpreliminary prospectus or final prospectus, in reliance upon and in conformity with writteninformation furnished by the selling Holder expressly for use in connection with a RegistrationStatement, or any preliminary prospectus or final prospectus or (ii) at any time when the Companyhas advised the Holder in writing that the Company does not meet the conditions for use of Rule 172and as a result that the Holder is required to deliver a current prospectus in connection with anydisposition of Registrable Securities, was corrected in any subsequent amendment or supplement tosuch prospectus that wasdelivered to the selling Holder before the pertinent sale or sales by the selling Holder; and suchselling Holder will reimburse any legal or other expenses reasonably incurred by the Company or anysuch director, officer, controlling person, or other selling Holder in connection withinvestigating or defending any such loss, claim, damage, liability or action; provided,however, that the liability of each selling Holder hereunder shall be limited to the netproceeds received by such selling Holder from the sale of Registrable Securities giving rise tosuch liability, and providedfurther, that the indemnity agreement contained in thisSection 10(b) shall not apply to amounts paid in settlement of any such loss, claim,damage, liability or action if such settlement is effected without the consent of those sellingHolder(s) against which the request for indemnity is being made (which consent shall not beunreasonably withheld).     (c) Promptly after receipt by an indemnified party under this Section 10 of notice ofthe commencement of any action, such indemnified party will, if a claim in respect thereof is to bemade against any indemnifying party under this Section 10, notify the indemnifying party inwriting of the commencement thereof and the indemnifying party shall have the right to participatein and, to the extent the indemnifying party desires, jointly with any other indemnifying partysimilarly noticed, to assume at its expense the defense thereof with counsel satisfactory to theindemnifying party or indemnifying parties, but the omission so to notify the indemnifying partywill not relieve it from any liability which it may have to any indemnified party for contributionor otherwise under the indemnity agreement contained in this Section 10 (except to theextent that such omission materially and adversely affects the indemnifying person’s ability todefend such action). In the event that the indemnifying party assumes any such defense, theindemnified party may participate in such defense with its own counsel and at its own expense,provided, however, if the defendants in any such action include
12

 
both the indemnified party and the indemnifying party and the indemnified party shall havereasonably concluded, based on an opinion of counsel reasonably satisfactory to the indemnifyingparty, that there may be a conflict of interest between the positions of the indemnifying party andthe indemnified party in conducting the defense of any such action or that there may be legaldefenses available to it and/or other indemnified parties which are different from or additional tothose available to the indemnifying party, the indemnified party or parties shall have the right toselect separate counsel to assume such legal defenses and to otherwise participate in the defenseof such action on behalf of such indemnified party or parties. Upon receipt of notice from theindemnifying party to such indemnified party of its election to assume the defense of such actionand approval by the indemnified party of counsel, the indemnifying party will not be liable to suchindemnified party under this Section 10 for any legal or other expenses subsequentlyincurred by such indemnified party in connection with the defense thereof unless the indemnifiedparty shall have employed such counsel in connection with the assumption of legal defenses inaccordance with the proviso to the preceding sentence (it being understood, however, that theindemnifying party shall not be liable for the expenses of more than one separate counsel and onelocal counsel, reasonably satisfactory to such indemnifying party, representing all of theindemnified parties who are parties to such action in which case the reasonable fees and expensesof counsel shall be at the expense of the indemnifying party.          (d) Notwithstanding anything to the contrary herein, the indemnifying party shall not beentitled to settle any claim, suit or proceeding unless in connection with such settlement theindemnified party receives an unconditional release with respect to the subject matter of suchclaim, suit or proceeding and such settlement does not contain any admission of fault by theindemnified party.          (e) If the indemnification provided for in this Section 10 is unavailable to orinsufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect ofany losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referredto therein, then each indemnifying party shall contribute to the amount paid or payable by suchindemnified party as a result of such losses, claims, damages or liabilities (or actions in respectthereof) in such proportion as is appropriate to reflect the relative fault of the Company on theone hand and the Holders on the other in connection with the statements or omissions or othermatters which resulted in such losses, claims, damages or liabilities (or actions in respectthereof), as well as any other relevant equitable considerations. The relative fault shall bedetermined by reference to, among other things, in the case ofan untrue statement, whether the untrue statement relates to information supplied by the Company onthe one hand or a Holder on the other and the parties’ relative intent, knowledge, access toinformation and opportunity to correct or prevent such untrue statement. The Company and theHolders agree that it would not be just and equitable if contribution pursuant to this subsection(e) were determined by pro rata allocation (even if the Holders were treated as one entity for suchpurpose) or by any other method of allocation which does not take into account the equitableconsiderations referred to above in this subsection (e). The amount paid or payable by anindemnified party as a result of the losses, claims, damages or liabilities (or actions in respectthereof) referred to above in this subsection (e) shall be deemed to include any legal or otherexpenses reasonably incurred by such indemnified party in connection with investigating ordefending any such action or claim.
13

 
No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)of the Securities Act) shall be entitled to contribution from any person who was not guilty of suchfraudulent misrepresentation. The Holders’ obligations in this subsection to contribute are severalin proportion to their sales of Registrable Securities to which such loss relates and not joint. Inno event shall the contribution obligation of a Holder be greater in amount than the dollar amountof the net proceeds (net of all expenses paid by such Holder in connection with any claim relatingto this Section 10 and the amount of any damages such Holder has otherwise been required topay by reason of such untrue or alleged untrue statement or omission or alleged omission) receivedby it upon the sale of the Registrable Securities giving rise to such contribution obligation.          (f) The parties to this Agreement hereby acknowledge that they are sophisticated businesspersons who were represented by counsel during the negotiations regarding the provisions hereofincluding, without limitation, the provisions of this Section 10, and are fully informedregarding said provisions. They further acknowledge that the provisions of this Section 10fairly allocate the risks in light of the ability of the parties to investigate the Company and itsbusiness in order to assure that adequate disclosure is made in a Registration Statement asrequired by the Securities Act and the Exchange Act.     11. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the Holders thebenefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit theHolders to sell the Registrable Securities to the public without registration, the Company agrees:(i) to make and keep public information available as those terms are understood in Rule 144, (ii)to file with the SEC in a timely manner all reports and other documents required to be filed by anissuer of securities registered under the Securities Act or the Exchange Act pursuant to Rule 144,(iii) as long as any Holder owns any Registrable Securities, to furnish in writing upon suchHolder’s request a written statement by the Company that it has complied with the reportingrequirements of Rule 144 and of the Securities Act and the Exchange Act, and to furnish to suchHolder a copy of the most recent annual or quarterly report of the Company, and such other reportsand documents so filed by the Company as may be reasonably requested in availing such Holder of anyrule or regulation of the SEC permitting the selling of any such Registrable Securities withoutregistration and (iv) undertake any additional actions reasonably necessary to maintain theavailability of the use of Rule 144.     12. SUSPENSION. Notwithstanding anything in this Agreement to the contrary, in theevent (i) of any non-voluntary demand on the Company by the SEC or any other federal or stategovernmental authority during the period of effectiveness of a Registration Statement foramendments or supplements to a Registration Statement or related prospectus or for additionalinformation; (ii) of the issuance by the SEC or any other federal or state governmental authorityof any stop order suspending the effectiveness of a Registration Statement or the initiation of anyproceedings for that purpose; (iii) of the receipt by the Company of any notification with respectto the suspension of the qualification or exemption from qualification of any of the RegistrableSecurities for sale in any jurisdiction or the initiation of any proceeding for such purpose; or(iv) of any event or circumstance which requires to comply with applicable law the making of anychanges in a Registration Statement or related prospectus, or any document incorporated or deemedto be incorporated therein by reference, so that, in the case of a Registration Statement, it
14

 
will not contain any untrue statement of a material fact or any omission to state a materialfact required to be stated therein or necessary to make the statements therein not misleading, andthat in the case of the prospectus, it will not contain any untrue statement of a material fact orany omission to state a material fact required to be stated therein or necessary to make thestatements therein, in the light of the circumstances under which they were made, not misleading,then the Company shall furnish to the selling Holders a certificate signed by the President orChief Executive Officer of the Company setting forth in detail the facts relating to one or more ofthe above described circumstances, and the right of the selling Holders to use a RegistrationStatement (and the prospectus relating thereto) shall be suspended for a period (the“**Suspension Period**”) of not more than ten (10) days after delivery by the Company of thecertificate referred to above in this Section 12. During the Suspension Period, none of theHolders shall offer or sell any Registrable Securities pursuant to or in reliance upon aRegistration Statement (or the prospectus relating thereto). The Company shall use its best effortsto terminate any Suspension Period as promptly as practicable.     13. TRANSFER OF REGISTRATION RIGHTS. A Holder shall have the right and may transfer orassign, at any time and from time to time, in whole or in part, to one or more Persons its rightshereunder in connection with the transfer of the Registrable Securities by such Holder to suchperson, provided that (a) such Holder complies with all laws applicable thereto,(b) the Company is furnished with written notice of the name and address of such transferee orassignee and the Registrable Securities to which such registration rights are being transferred,(c) at or before the time the Company received the written notice contemplated by clause (b) ofthis sentence the transferee or assignee agrees in writing (i) that it is an “accredited investor”as that term is defined in Rule 501 of Regulation D, (ii) to be bound by, all of the terms andconditions of, this Agreement by duly executing and delivering to the Company an Instrument ofAdherence in the form attached as Exhibit C hereto and (iii) agree to deliver the FINRALock-Up if so requested by FINRA.     14. ENTIRE AGREEMENT. This Agreement, the Warrants, the Placement Agency Agreement,the Subscription Agreement and other documents relating to the Offering (and all exhibits andsupplements to such documents) constitute and contain the entire agreement and understanding of theparties with respect to the subject matter hereof, and supersede any and all prior negotiations,correspondence, agreements or understandings with respect to the subject matter hereof.     15. MISCELLANEOUS.          (a) This Agreement may not be amended, modified or terminated, and no rights or provisions maybe waived, except with the written consent of the Company and the holders of a majority of theRegistrable Securities issued and outstanding or issuable upon conversion of Unit Shares andexercise of the Warrants; provided, that, no consent shall be required in order toadd additional Investors as parties hereto in accordance with the Offering.          (b) This Agreement shall be governed by and construed and enforced solely and exclusively inaccordance with the internal laws of the State of New York and without regard to any conflicts oflaws principles thereof, and shall be binding upon and inure to the benefit of the parties heretoand their respective heirs, personal representatives, permitted
15

 
transferees, successors or assigns. This Agreement shall also be binding upon and inure to thebenefit of any transferee of any of the Registrable Securities.          (c) Each of the parties hereto irrevocably and expressly submits to the exclusive and solejurisdiction of the courts of the State of New York located in New York County and the UnitedStates District Court for the Southern District of New York for the purpose of any suit, action,proceeding or judgment relating to or arising out of this Agreement and the transactionscontemplated hereby. Service of process in connection with any such suit, action or proceeding maybe served on each party hereto anywhere in the world by the same methods as are specified for thegiving of notices under this Agreement. Each of the parties hereto irrevocably consents to thejurisdiction of any such court in anysuch suit, action or proceeding and to the laying of venue in such court. Each party heretoirrevocably waives any objection to the laying of venue of any such suit, action or proceedingbrought in such courts and irrevocably waives any claim that any such suit, action or proceedingbrought in any such court has been brought in an inconvenient forum. **EACH OF THE PARTIES HERETOWAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT ANDREPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.**          (d) Any notices, reports or other correspondence (hereinafter collectively referred to as“correspondence”) required or permitted to be given hereunder shall be in writing and shall be sentby postage prepaid first class mail, courier or telecopy or delivered by hand to the party to whomsuch correspondence is required or permitted to be given hereunder, and shall be deemed sufficientupon receipt when delivered personally or by courier, overnight delivery service or confirmedfacsimile, or three (3) business days after being deposited in the regular mail as certified orregistered mail (airmail if sent internationally) with postage prepaid, if such notice is addressedto the party to be notified at such party’s address or facsimile number as set forth below:          (i) All correspondence to the Company shall be addressed as follows:NYTEX Energy Holdings, Inc.